Cap 3 of 1997 The Retirement Benefits Act.doc

7/28/2019 Cap 3 of 1997 The Retirement Benefits Act.doc

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CHAPTER 3 OF 1997

THE RETIREMENT BENEFITS ACT

An Act of Parliament to establish a Retirement Benefits

Authority for the regulation, supervision and promotion ofretirement benefits schemes, the development of theretirement benefits sector and for connected purposesENACTED by the Parliament of Kenya as follows -

PART I - PRELIMINARY1. This Act may be cited as the Retirement Benefits Act. 1997, and

shall come into operation on such date as the Minister may bynotice in the Gazette, appoint and different dates may beappointed for different provisions.

Short title and

commencement.

2. In this Act, unless the context otherwise requires-

"Actuary" means a fellow of the Institute of Actuaries in England. orof the Faculty of Actuaries in Scotland, or of the Canadian Institute

of Actuaries, or a person holding such equivalent qualification asthe Board may, by notice in the Gazette, prescribe;"Authority" means the Retirement Benefits Authority established bysection 3;"Board" means the Board of Directors of the Authority constitutedunder section 6;"Chief Executive Officer" means the Chief Executive Officer of theAuthority appointed under section 11;

"custodian" means a company whose business includes takingresponsibility for the safe custody of the funds, securities, financial

instruments and documents of title of the assets of scheme funds;"financial year" means the financial year of the Authority prescribedby section 19;"Fund" means the Retirement Benefits Authority Fund establishedby section 17;"Levy" means the Retirement Benefits Levy to be imposed undersection 16;"manager" means a company whose business includes -

(i) undertaking, pursuant to a contract or other arrangement, themanagement of the funds and other assets of a scheme fund for

purposes of investment;(ii) providing consultancy services on the investment of scheme

funds; or(iii) reporting or disseminating information concerning the assetsavailable for investment of scheme funds."member" means a member of a retirement benefits scheme andincludes a person entitled to or receiving a benefit under aretirement benefits scheme;

"Minister" means the Minister for the time being responsible formatters relating to finance;

"retirement benefits scheme" means any scheme or arrangement(other than a contract for life assurance) whether established by a

written law for the time being in force or by any other instrument,under which persons are entitled to benefits in the form ofpayments, determined by age, length of service, amount ofearnings or otherwise and payable primarily upon retirement, orupon death, termination of service, or upon the occurrence of such

Interpretation.

7 of 1998.


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other event as may be specified in such written law or other

instrument;"scheme" means a retirement benefits scheme;

"scheme fund" means the retirement benefits scheme fund to beestablished pursuant to the provisions of section 32;"scheme rules" means the rules specifically governing the

constitution and administration of a particular scheme;"sponsor" means a person who establishes a scheme;"Tribunal" means the Appeals Tribunal established under section4b-;"trustee" means a trustee of a scheme fund.

PART II - THE RETIREMENT BENEFITS AUTHORITY3 (1) There is established an Authority to be known as theRetirement Benefits Authority.(2) The Authority shall be a body corporate with perpetualsuccession and a common seal and shall in its corporate name becapable of -(a) suing and being sued;(b) taking, purchasing or otherwise acquiring, holding, charging or

disposing of movable and immovable property;(c) borrowing or lending money; and

(d) doing or performing all other things or acts for the furtheranceof the provisions of this Act, which may be lawfully done orperformed by a body corporate.

Establishment and

incorporation of the

Retirement Benefits

Authority.

4. The headquarters of the Authority shall be in Nairobi. Headquarters.

5. The object and functions of the Authority shall be to-

(a) regulate and supervise the establishment and management ofretirement benefits schemes;

(b) protect the interests of members and sponsors of retirementbenefits schemes;

(c) promote the development of the retirement benefits sector:(d) advise the Minister on the national policy to be followed withregard to retirement benefits schemes and to implement allGovernment policies relating thereto; and(e) perform such other functions as are conferred on it by this Actor by any other written law.

Object and functions of

the Authority.

6. The management of the Authority shall vest in a Directors of the

Authority which shall comprise(a) a chairman to be appointed by the Minister from amongst themembers appointed under paragraph (f);(b) the Chief Executive Officer appointed under section 11;(c) the Permanent Secretary in the Ministry for the time beingresponsible for matters relating to finance or his representative;(d) the Commissioner of Insurance;

(e) the Chief Executive of the Capital Markets Authority; and(f) five members, not being public officers, appointed by the

Minister by virtue of their knowledge or experience in mattersrelating to the administration of scheme funds, banking, insurance,

law or actuarial studies.

Board of Board of

Directors.

7. The Board shall have all powers necessary for the performance Powers of the Board.


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of its functions under this Act and in particular, the Board shall

have power to -(a) control, supervise and administer the assets of the Authority in

such manner and for such purposes as best promote the purposefor which the Authority is established;(b) determine the provisions to be made for capital and recurrent

expenditure and for reserves of the Authority;(c) receive any grants, gifts, donations or endowments 6n behalf ofthe Authority and make legitimate disbursements therefrom;(d) enter into association with other bodies or organisations withinor outside Kenya as the Board may consider desirable or

appropriate and in furtherance of the purpose for which theAuthority is established;

(e) open a banking account or banking accounts for the funds .ofthe Authority; and

(f) invest the funds of the Authority not currently required for itspurposes in the manner provided in section 18.

8. The conduct and regulation of the business and affairs of theBoard shall be as provided in the Schedule but subject thereto, the

Board shall regulate its own procedure.

Conduct of business andaffairs of the Board.

9. The Board may, by resolution either generally or in anyparticular case, delegate to any committee of the Board or to anymember, officer, employee or agent of the Authority, the exerciseof any of the powers or the performance of any of the functions orduties of the Authority under this Act or under any other written

law.

Delegation by the Board.

10. The Authority, in consultation with the Minister, shall paymembers of the Board such remuneration, fees or allowances forexpenses as it may determine.

Remuneration of Boardmembers

11.(l) There shall be a Chief Executive Officer who shall beappointed by the Board in consultation with the Minister and whose

terms and conditions of service shall be determined by the Board inthe instrument of appointment or otherwise in writing from time totime.(2) No person shall be appointed under this section unless he hasat least ten years experience in a managerial capacity in theretirement benefits, accounting, finance, insurance or the banking

sectors.(3) The Chief Executive Officer shall be an ex officio member of the

Board but shall have no right to vote at any meeting of the Board.(4) The Chief Executive Officer shall, subject to the directions of

the Board, be responsible for the day to day management of theaffairs of the Authority.

The Chief Executive

Officer.

12. (1) The Board shall appoint a secretary to the Board on suchterms and conditions of service as the Board may determine.

(2) The Board may appoint such officers or servants as arenecessary for the proper discharge of the functions of the Authority

under this Act or any other written law, upon such terms and

conditions of service as the Board may determine.

Staff of the Authority.


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14. No matter or thing done by a member of the Board or any

Protection from officer, employee or agent of the Authority shall, ifthe matter or thing personal liability is done bonafide for executing

the functions, powers or duties of the Authority, render themember, officer, employee or agent or any person acting on theirdirections personally liable to any action, claim or demand

whatsoever.

Protection from liability.

15. The provisions of this Act shall not relieve the Authority of theliability to pay compensation or damages to any person for any

injury to him, his property or any of his interests caused by theexercise of any power conferred by this Act or any other written

law or by the failure, whether wholly or partially, of any works.

Liability of Authority fordamages.

16.(1) The Minister may, in consultation with the Board, by orderpublished in the Gazette, impose a levy to be known as theRetirement Benefits Levy on the contributions made to scheme

funds, or on the assets of such funds, or on such other base as hemay determine.

(2) A levy imposed under this section shall be payable at such rateas may be specified in the order.(3) An order under this section may contain provisions as to thetime at which any amount payable by way of the levy shall becomedue.(4) All moneys received in respect of the levy shall be paid into theFund and if not paid on or before the date prescribed by the order,the amount due and any sum payable under subsection

(5) shall be a civil debt recoverable summarily by the Authority.(5) If a person fails to pay any amount payable by him by way of

the levy on or before the date prescribed by the order, a sum equalto five per centum of the amount shall be added to the amount due

for each month or part thereof during which the amount dueremains unpaid.

The Retirement Benefits

Levy.

17.(1) There is established a fund to be known as the RetirementBenefits Authority Fund which shall vest in the Authority.

(2) There shall be paid into the Fund -(a) all proceeds of the levy established by section 16;

(b) such moneys or assets as may accrue to or vest in theAuthority in the course of the exercise of its powers or theperformance of its functions' under this Act;

(c) such sums as may be payable to the Authority pursuant to thisAct or any other written law, or pursuant to any gift or trust;(d) such sums as may be granted to the Authority by the Ministerpursuant to subsection (3); and(e) all moneys from any other source provided for or donated or

lent to the Authority.(3) There shall be made to the Authority out of moneys provided

by Parliament for that purpose, grants towards the expenditureincurred by the Board in the exercise of its powers or theperformance of its functions under this Act.

The Retirement BenefitsAuthority Fund.

18.( 1) The Authority may invest any of its funds in securities

which for the time being trustees may by law invest trust funds, orin any other securities which the Treasury may, from time to time,

Investment of funds of

the Authority.


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approve.

(2) The Authority may place on deposit with such bank or banks asit may determine, any moneys not immediately required for the

purposes of the Authority.

19. The Financial year of the Authority shall be the period of twelvemonths ending on the thirtieth June in each year.

Financial Year.

20.( 1) Before the commencement of each financial year, the Board

Annual estimates shall cause to be prepared estimates of revenueand expenditure of the Authority for that year.(2) The annual estimates shall make provision for all the estimatedexpenditure of the Authority for the financial year and in particular,the estimates shall provide for -(a) the payment of the salaries, allowances and other charges inrespect of the staff of the Authority;(b) the payment of pensions, gratuities and other charges in

respect of the retirement benefits which are payable out of thefunds of the Authority;

(c) the proper maintenance of the buildings and grounds of theAuthority;(d) the maintenance, repair and replacement of the equipment andother property of the Authority;(e) the creation of such reserve funds to meet future or contingentliabilities in respect of retirement benefits, insurance orreplacement of buildings or equipment, or in respect of such othermatter as the Board may deem appropriate.

(3) The annual estimates shall be prepared at least three monthsbefore commencement of the financial year to which they relate

and shall be submitted to the Board for approval and after suchapproval, the Authority shall not increase the annual estimates

without the consent of the Minister.(4) No expenditure shall be incurred for the purposes of the Boardexcept in accordance with the annual estimates approved underthis section or in pursuance of an authorisation of the Authoritygiven with the prior approval of the Minister.

Annual estimates.

21.(1) The Authority shall cause to be kept all proper books and

records of account of the income, expenditure and assets of theAuthority.(2) Within a period of four months after the end of each financial

year, the Board shall submit to the Auditor- General (Corporations)or an auditor appointed under this section, the accounts of theAuthority together with -(a) a statement of income and expenditure during that year; and(b) a statement of the assets and liabilities of the Authority on the

last day of that year.(3) The accounts of the Authority shall be audited and reported

upon in accordance with sections 29 and 30A of the Exchequer andAudit Act, by the Auditor-General (Corporations) or by an auditorappointed by the Board under the authority of the Auditor-General(Corporations), given in accordance with section 29 (2)(b) of thatAct.

Accounts and audit.

PART III - REGISTRATION OF RETIREMENT BENEFITS SCHEMES, Retirement benefitsschemes, managers and


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MANAGERS AND CUSTODIANS

22.(1) No person shall establish a retirement benefits schemeexcept in accordance with the provisions of this Act and under the

authority of a certificate issued under this Act.(2) No person shall act as a manager or a custodian unless suchperson is duly registered under this Act and holds a valid certificate

of registration issued pursuant to the provisions of this Act.(3) The Authority shall, in consultation with the Minister, by noticein the Gazette and by public advertisement in at least two dailynewspapers of wide circulation, publish a list of all registeredmanagers and custodians once in every calendar year.

(4) A person who -(a) establishes a retirement benefits scheme; or

(b) acts as a manager or a custodian contrary to the provisions ofthis section commits an offence and shall be liable on conviction, to

a fine not exceeding five hundred thousand shillings, or toimprisonment for a term not exceeding two years, or to both.

custodians to be

registered.7 of 1998.

23.(1) A person proposing to establish a retirement benefitsscheme or to act as a manager or a custodian shall apply to the

Authority for, and obtain, a certificate of registration beforeestablishing the scheme or commencing the performance of any of

the functions of a manager or a custodian.(2) An application under subsection (1) shall be -(a) addressed to the Chief Executive Officer;(b) in the prescribed form; and(c) accompanied by the prescribed fee.(3) In considering an application under this section, the Authoritymay request the applicant to supply such additional information asit considers necessary in determining the application.

(4) The Authority may, subject to the provisions of this Act and onpayment of the prescribed fee, register the applicant and issue to

the applicant a certificate of registration in the prescribed form,authorising the applicant to establish a retirement benefits scheme,or to act as a manager or a custodian, as the case may be.(5) A certificate issued under this section shall be subject to suchconditions as the Authority may, in consultation with the Minister,impose.

Registration.7 of 1998.

24.( 1) No scheme, other than a scheme established by a writtenlaw shall be registered under this Act unless-

(a) it is proposed to be established under an irrevocable trust and(b) the proposed scheme rules adequately protect the rights aminterests of the sponsors and members thereof.(2) No scheme shall be registered under this Act unless the trusteethereof satisfy the requirements specified in section 26.

Requirements for

registration of schemes.

25. No applicant for registration as a manager shall be registered

unless such applicant -(a) is a limited liability company incorporated under the CompaniesAct whose liability is limited by shares and whose main object is tomanage scheme funds;(b) has such minimum paid up share capital as may be prescribed(c) is capable of meeting the obligations to members and sponsorspecified in the scheme rules;(d) has the professional capacity to manage scheme funds;

Requirements for

egistration of managers.


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(e) has never been involved in the management of the scheme

fund of any scheme which was deregistered due to any failure onthe part of the management;.

(f) meets such additional requirements as may be prescribed.

25A. No applicant for registration as a custodian shall be registeredunless such applicant -(a) is a limited liability company incorporated under the Companies

Act whose main object is to perform the functions of a custodianwithin the meaning of this Act; and

(b) has the professional and technical capacity and adequateoperational systems to perform the said functions; and

(c) has never been a custodian of any scheme fund which wasderegistered due to any fault, either fully or partially, of thecustodian;(d) meets such additional requirements as may be prescribed.

Requirements for

registration of custodians.

7 of 1998.

26.(1) Every scheme, other than a scheme established by a writtenlaw shall be established under an irrevocable trust.

(2) No person shall be a trustee of any scheme fund if such person-

(a) has been sentenced to imprisonment by a court of competentjurisdiction for a period of six months or more;(b) is adjudged bankrupt;(c) was previously involved in the management or administration ofa scheme which was deregistered for any failure on the part of themanagement or the administration thereof;

(d) is disqualified under any other written law, or his holding officeas such is deemed by the Authority as being, in any way,

detrimental to the scheme.

Requirements with regardto trustees.

27.(1) The Authority may refuse to register any scheme, manager,or custodian Refusal of under section 23 if satisfied thatregistration,(a) the information contained in the application for registration isfalse or untrue in any material particular; or

(b) the applicant does not meet the requirements for registration.(2) Where the Authority refuses to register any scheme, manager,

or custodian, it shall forthwith notify the applicant In the prescribedform, specifying the reasons for such refusal

Refusal of registration.

7 of 1998.

28.(1) Subject to subsection (2), the Authority may deregister ascheme if -

(a) it discovers after registration that a statement was made inconnection with the application therefor which the applicant knew

to be false or untrue in any material particular; or(b) the scheme is wound up or is otherwise dissolved; or(c) the scheme docs not conform to the provisions of this Act orany regulations made or directions issued under this Act or anycondition of the certificate of registration.(2) The Authority shall, before deregistering a scheme, give thetrustees, sponsors and members of the scheme at least twenty-eight days notice of its intention and shall consider any

representations made to it in writing by the trustees, sponsors ormembers within that period before deregistering the scheme.

Deregistration.7 of 1998.


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(3) Subject to subsection (4), the Authority may deregister a

manager or custodian if -(a) it discovers after registration that the manager or custodian

made a statement in or in connection with the application thereforwhich was false or untrue in any material particular; or(b) any event occurs which renders the manager or custodian

ineligible to manage or provide custodial services to a schemefund, as the case may be;(c) the manager's or custodian's business is wound up or isotherwise dissolved;(d) the manager or custodian is in breach of any condition attached

to the certificate of registration;(e) the manager or custodian does not comply with any of

provisions of this Act, or with any regulations made or directionsissued thereunder.

(4) The Authority shall, before deregistering a manager orcustodian, give the manager and the sponsors or trustees of thescheme at least twenty-eight days notice of its intention, and shall

consider any representations made to it in writing by the manageror custodian within that period before deregistering the manager orcustodian.

(5) Every notice under subsections (2) and (4) shall be in theprescribed form and shall specify the reasons for the intended

deregistration.(6) The deregistration of a scheme shall not in any way prejudice

the claims of members under the scheme.(7) Where the assets of a deregistered scheme are insufficient tofully discharge its obligations to its members, the Chief ExecutiveOfficer may, subject to the approval of the Board, take over thedistribution or transfer of the assets and the supervision of the

scheme in order to protect the interests of members.

29.(1) Subject to this Act, a certificate of registration issued inrespect of a scheme shall be valid from the date of issue and shallremain in force until the scheme is deregistered or wound up inaccordance with the scheme rules or the provisions of the writtenlaw under which the scheme is established.(2) Subject to subsection (4), a certificate of registration issued toa manager or a custodian shall be valid from the date of issue andshall, unless earlier revoked, expire on the thirty-first December

next following the date of issue but shall thereafter, uponapplication in such manner and the payment of such fee as may be

prescribed, be renewable annually.(3) An application for the renewal of a certificate of registration

under subsection (2) shall be made at least three months beforethe expiry of the certificate of registration.(4) Notwithstanding the provisions of subsection (2), where anapplication for the renewal of a certificate of registration has beenmade, such certificate shall continue in force until the applicationfor the renewal is determined.

Duration and renewal of

certificates. 7 of 1998.

30.(1) The Chief Executive Officer shall keep a register in suchform as the Board may determine, of all schemes, managers andcustodians registered under this Act and shall enter therein, in

respect of the schemes, managers or custodians, such particularsas the Board may specify.

Register.

7 of 1998.


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(2) The Board may determine the time or times during which, and

the extent to which any person may, on payment of the prescribedfee, inspect the register kept under this section or obtain copies

thereof.

31. (1) For the purposes of ascertaining the facts concerning theregistration of a scheme, manager or custodian, entries made inthe register shall be prima facie evidence as to the facts specified

in the register.(2) A document certified by the Chief Executive Officer as a true

copy or extract from the register shall be admissible in any court asprima facie evidence of the contents of the register.

Use of register in

evidence.7 of 1998.

PART IV REGULATION AND SUPERVISION OF RETIREMENTBENEFITS SCHEMES

32. (1) There shall be, in respect of every scheme other than aScheme funds. scheme funded out of the Consolidated Fund, a

scheme fund into which all contributions, investment earnings,income and all other moneys payable under the scheme rules or

the provisions of this Act shall be paid.(2) The scheme fund and all moneys therein shall at all times bemaintained separately from any other funds under the control ofthe trustees or the manager thereof.(3) Subject to the provisions of this Act, the Minister may, inconsultation with the Authority, make regulations with regard tothe funding, vesting, custody, management, application and thetransfer of scheme funds and the accounting for such funds.

Scheme funds.

33.(1) Notwithstanding the provisions of any written law for the

time being in force, an employer may, with the approval of hisemployees, pay any statutory contributions in respect of suchemployees into any scheme fund prescribed for that purpose:Provided that where such payment involves a transfer of fundsfrom another scheme fund, the employer shall, at least sixty daysbefore commencing such payment, give written notice thereof tothe Authority and to the trustees of the scheme fund from which

such funds shall be transferred. (2) In this section, the expression"statutory contributions" means contributions required under the

provisions of a written law to be paid into a retirement benefitsscheme.

Statutory contributions.

34.(1) The trustees of every scheme shall cause to be kept allproper books and records of account of the income, expenditure

and assets of the scheme fund.(2) Within a period of three months after the end of each financial

year, the trustees shall cause to be prepared in respect of thescheme fund -(a) a balance sheet;(b) a statement of income and expenditure;(c) a statement of the assets and liabilities of the scheme as on thelast day of that year;(d) such other documents as may be prescribed.(3) The accounts of the scheme fund in respect of each financial

year shall be audited by an auditor appointed by the trustees withthe approval of the Board.

Annual report andaccounts,

7 of 1998.


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(4) Within four months after the end of each financial year, the

trustees shall submit a copy of the audited accounts of the schemeto the Chief Executive Officer.

(5) Every scheme shall publish its annual accounts in such manneras the Minister may, in consultation with the Authority, prescribe.

35. The Board may require the trustees of such schemes orcategories of schemes as it may specify, to cause the schemes to

be evaluated by an actuary appointed by the trustees with theapproval of the Board and to present the actuarial report to the

Chief Executive Officer at such regular intervals as the Board mayspecify.

Actuarial evaluations.

36. Notwithstanding anything to the contrary contained in anyother written law, where a judgement or order against a memberof a scheme is made, no execution or attachment or process of anynature shall be issued in respect of the contributions or funds of

the member or his employer except in accordance with the schemethe scheme rules and such contributions shall not form part of the

assets of the member or of his employer in the event ofbankruptcy.

Protection againstattachment.

37. (1) Every scheme shall have a prudent investment policy onthe investment of the funds of the scheme so as to maintain the

capital funds of the scheme and generally to secure market rates ofreturn on such investment.

(2) Notwithstanding the provisions of any other written law, theinvestment policy of a scheme shall be implemented subject to any

regulations the Minister may, in consultation with the Authority,

make for that purpose.(3) There shall be submitted to the Chief Executive Officer, inrespect of every scheme, a statement of all investments of thescheme fund, in such form, manner and at such intervals as maybe prescribed.

Investment schemefunds.

7 of 1998.

38. (1) No scheme funds shall be-(a) used to make direct or indirect loans to any person; or(b) invested contrary to any guidelines prescribed for that purpose;

(c) invested with a bank, non-banking financial institution,insurance company, building society or other similar institution with

a view to securing loans, including mortgages, at a preferential rateof interest or for any other consideration to the sponsor, trustees,

members or the manager of such scheme.(2) The Authority may disqualify a person who acts in

contravention of the provisions of this section from participating inany way in the management, custody or administration of anyscheme fund: Provided that the Authority may, on the expiry of atleast five years from the date of disqualification, upon applicationby such person and payment of the prescribed fee, lift thedisqualification subject to such conditions as it may deemappropriate.

Restrictions on use of

scheme funds.

7 of 1998.

39.(1) Where, in the opinion of the Chief Executive Officer, atrustee, manager or custodian of a scheme is pursuing an act or

Unsafe and unsoundpractices.


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course of conduct which the Chief Executive Officer considers to be

an unsafe or unsound practice, or in any way detrimental to thescheme, the Chief Executive Officer shall, by notice in writing,

direct such trustee, manager or custodian to refrain from pursuingsuch act or course of conduct. (2) A trustee, manager or custodianwho acts in contravention of a direction under this section commits

an offence and shall be liable, on conviction, to a fine notexceeding five hundred thousand shillings, or to imprisonment for aterm not exceeding two years, or to both.

7 of 1998.

40. The trustee, manager or custodian of a scheme shall -(a) ensure that the scheme fund is at all times managed in

accordance with this Act, any regulations made thereunder, thescheme rules and any directions given by the Chief ExecutiveOfficer;(b) take reasonable care to ensure that the management of thescheme is carried out in the best interests of the members andsponsors of the scheme;(c) report to the Chief Executive Officer, as soon as reasonablypracticable, any unusual occurrence which in his view could

jeopardise the rights of the members or sponsors of the scheme;and

(d) report to the Chief Executive Officer, as soon as reasonablypracticable, if any contributions into a scheme fund remain due fora period of more than thirty days.

General obligations of

trustees and managers.

7 of 1998.

PART V - INSPECTION AND APPOINTMENT OF INTERIM

ADMINISTRATOR41.(1) The Chief Executive Officer may, at any time and from time

to time, and shall, if so directed by the Board, cause an inspectionto be made by an inspector authorised by him in writing, of any

scheme or of the business of any manager or custodian registeredunder this Act, and of its books, accounts and records.(2) When an inspection is made under subsection(1), the manager or custodian of the scheme concerned and everyofficer, trustee or employee thereof shall make available to theinspector all the books, accounts records and other documents of

the scheme and such correspondence, statements and informationrelating to the scheme as the inspector may require, within seven

days or such longer period as the inspector may direct in writing.(3) Any failure to produce any books, accounts, records,

documents, correspondence, statements, returns or otherinformation within the period specified in the direction undersubsection (2) constitutes an offence:.Provided that -(a) the books, accounts and other documents shall not, in thecourse of inspection, be removed from the premises at which theyare produced;(b) the inspector may make copies of any books, accounts and

other documents required for the purposes of his report; and(c) all information obtained in the course of the inspection shall be

treated as confidential and used solely for the purposes of this Act.

Inspection.

7 of 1998.

42.(1) An inspector may, by notice in writing, requite any personwho is or has at any time been a trustee, manager or custodian ofthe scheme or being inspected, or an officer, employee, agent,

Powers of the inspector.

7 of 1998.


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accountant, auditor or actuary appointed by such trustee, manager

or custodian(a) give to the inspector all reasonable assistance in connection

with the inspection; or(b) appear before the inspector for examination concerning mattersrelevant to the inspection; or

(c) produce any books or documents relating to the affairs of thescheme being inspected.(2) A person who -(a) refuses or fails to comply with a requirement of an inspectorwhich is applicable to him, to the extent to which he is able to

comply with it; or(b) obstructs or hinders an inspector in the exercise of his powers

under this Act; or(c) furnishes information or makes a false statement which he

knows to be false or misleading in any material particular; or(d) when appearing before an inspector for examination, makes astatement which he knows to be false or misleading in any material

particular, commits an offence.(3) A person convicted of an offence under subsection (2) shall beliable to a fine not exceeding fifty thousand shillings, or, in the case

of a natural person, to imprisonment for a term not exceedingthree years, or to both.

(4) Where an offence under subsection (2) is a continuing offence,the person convicted shall, in addition to the penalty prescribed in

subsection (3), be liable to a further fine of one thousand shillingsfor every day during which the offence continues.(5) Where the person convicted under this section is a bodycorporate, the Authority may, notwithstanding any other penaltyimposed under this Act, apply to a court for the winding up of such

body corporate.

43. An inspector appointed under this Part shall submit his reportto the Chief Executive Officer and the report shall draw attention toany breach of the requirements of this Act and any regulationsmade thereunder, any mismanagement or lack of managementskills in the manager and any other matter revealed or discoveredin the course of the inspection warranting, in the opinion of theinspector, remedial action or further investigation,

Inspection report.

44. The Chief Executive Officer may, by notice in the prescribed

form, require the trustees, managers or custodians, of a schemeinspected under this Part to comply, by such date or within suchperiod as may be specified therein, with such directions as theAuthority considers necessary in connection with any matter arisingout of the report made under section 43.

Directions to manager.

7 of 1998.

45.(1) This section applies and the powers conferred by subsection

(2) may be exercised in the following circumstances -(a) if the trustees of a scheme fail to submit to the Chief ExecutiveOfficer the annual accounts required under section 34 for over sixmonths after the end of the financial year to which they relate;(b) if the trustees are found to have submitted or provided anyaccounts, returns, statements, books, records, correspondence,documents or other information relating to the scheme fund whichare false or misleading; or

Appointment of interim

administrator.

7 of 1998.


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(c) if the Chief Executive Officer, whether on inspection or

otherwise, becomes aware of any fact or circumstance which, in hisopinion, warrants the exercise of the relevant power in the

interests of the sponsors and members of the scheme or in thepublic interest.(2) The Chief Executive Officer may, with the approval of the

Authority -(a) appoint any person (in this Act referred to as "an interimadministrator") to assume the management, control and conduct ofthe affairs and business of the trustees, the manager or thecustodian, as the case may be, to exercise all the powers of the

trustees or the manager to the exclusion of such trustees, themanager or the custodian;

(b) remove any officer or employee of the trustees, the manager orthe custodian who, in the opinion of the Chief Executive Officer,

has caused or contributed to any contravention of the provisions ofthis Act or any regulations made thereunder or to any deteriorationin the financial stability of the scheme or has been guilty of conduct

detrimental to the interests of the members or sponsors of thescheme; or(c) by notice in the Gazette, revoke or cancel any existing power of

attorney, mandate, appointment or other authority by the trusteesor manager in favour of any officer, employee or any other person.

(3) The appointment of an interim administrator shall be for suchperiod, not exceeding twelve months, as the Chief Executive Officer

may specify in the instrument of appointment but may be extendedby the High Court, upon application by the Chief Executive Officer,if such extension appears justified.(4) An interim administrator shall, upon assuming themanagement, control and conduct of the affairs and business of the

trustees, the manager or the custodian, discharge his duties withdiligence and in accordance with sound actuarial and financialprinciples and in particular, with due regard to the interests of the

trustees, the manager or the custodian, the custodian membersand sponsors of the scheme.

(5) The responsibilities of the interim administrator shall be -(a) tracing, preserving and securing all the assets and property ofthe scheme;(b) recovering all debts and other sums of money due to and owingto the scheme;(c) evaluating the solvency and the liquidity of the scheme;(d) assessing the schemes, the manager's and the custodian's

compliance with the provisions of this Act and any regulation madethereunder;(e) determining the adequacy of the capital and reserves and the

management of the scheme and recommending to the ChiefExecutive Officer any restructuring or reorganisation which heconsiders necessary and which, subject to the provisions of anyother law, may be implemented by him on behalf of the trustees orthe manager; and(f) obtain from any former trustees, the manager or the custodianof the scheme or any officer, employee or agent thereof, anydocuments, records, accounts, statements, correspondence or

information relating to the scheme.(6) The interim administrator shall, within a period of twelve

months from the date of his appointment, prepare and submit tothe Chief Executive Officer, a report on the financial position and


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the management of the scheme with recommendations as to

whether-(a) the scheme is capable of being revived; or

(b) the scheme should be deregistered.(7) The Chief Executive Officer shall, after taking into account thereport of the interim administrator, make appropriate

recommendations to the Board which shall take a decision on thematter.(8) Neither the Chief Executive Officer nor any officer, employee oragent of the Authority nor the interim administrator nor any otherperson appointed, designated or approved by the Chief Executive

Officer under the provisions of this Part shall be liable in respect ofany act or omission done in good faith in the execution of the

duties undertaken by him.

PART VI - APPEALS46. (1) Any member of a scheme who is dissatisfied with a decisionof the manager, custodian or trustees of the scheme may request,in writing, that such decision be reviewed by the Chief ExecutiveOfficer with a view to ensuring that such decision is made in

accordance with the provisions of the relevant scheme rules or theAct under which the scheme is established.

(2) A copy of every request under this section shall be served onthe manager or trustees of the scheme.

Appeals to the Chief

Executive Officer.7 of 1998.

47.(1) The Minister shall, by order published in the Gazette,establish an Appeals Tribunal for the purpose of hearing appeals

under this Act.(2) The Tribunal shall consist of a chairman and four other

members who shall be appointed by the Minister and who shallhold office for a period of three years upon such terms and

conditions as may be prescribed.(3) The chairman of the Tribunal shall be an advocate of the HighCourt of Kenya of not less than seven years standing.(4) All matters before the Tribunal shall, in the event of adifference of opinion, be decided by the votes of the majority of themembers thereof.

Establishment of AppealsTribunal,

48. (1) Any person aggrieved by a decision of the Authority or ofthe Chief Executive Officer under the provisions of this Act or anyregulations made thereunder may appeal to the Tribunal within

thirty days of the receipt of the decision.(2) Where any dispute arises between any person and theAuthority as to the exercise of the powers conferred upon theAuthority by this Act, either party may appeal to the Tribunal insuch manner as may be prescribed.

Appeals the Tribunal.

49.(1) On the hearing of an appeal, the Tribunal shall have all thepowers of a subordinate court of the first class to summonwitnesses, to take evidence upon oath or affirmation and to call forthe production of books and other documents.(2) Where the Tribunal considers it desirable for the purpose ofavoiding expense or delay or any other special reason so to do, it

may receive evidence by affidavit and administer interrogatoriesand require the person to whom the interrogatories are

Powers of Appeals

Tribunal.


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administered to make a full and true reply to the interrogatories

within the time specified by the Tribunal.(3) In its determination of any matter, the Tribunal may take into

consideration any evidence which it considers relevant to thesubject of an appeal before it, notwithstanding that the evidencewould not otherwise be admissible under the law relating to

admissibility of evidence.(4) The Tribunal shall have power to award the costs of anyproceedings before it and to direct that costs shall be paid inaccordance with any scale prescribed for suits in the High Court orto award a specific sum as costs.

(5) All summons, notices or other documents issued under thehand of the chairman of the Tribunal shall be deemed to be issued

by the Tribunal.(6) Any interested party may be represented before the Tribunal by

an advocate or by any other person whom the Tribunal may, in itsdiscretion, admit to be heard on behalf of the party.

50. Any person summoned by the Tribunal to attend and giveevidence or to produce any records, books of account, statements

or other documents, or required to answer interrogatories and who,without sufficient cause -

(a) refuses or fails to attend at the time and place mentioned in thesummons served on him; or(b) refuses or fails to answer, fully and satisfactorily, to the best ofhis knowledge and belief, all questions lawfully put to him by theTribunal; or(c) refuses or fails to produce any records, books of account,statements or other documents which are in his possession orunder his control or mentioned or referred to in any summons

served on him, commits an offence and shall be liable, onconviction, to a fine not exceeding one hundred thousand shillings,

or to imprisonment for a term not exceeding two years, or to both.

Refusal or failure to giveevidence

51.(1) Where the Tribunal awards costs in an appeal, it shall, onapplication by the person to whom the costs are awarded, issue tohim a certificate stating the amount of the costs.

(2) Every certificate issued under subsection(1) may be filed in theHigh Court by the person, in whose favour the costs have been

awarded and upon being so filed, shall be deemed to be a decree ofthe High Court and may be executed as such:

Provided that an order for costs against the Government shall notbe enforced save in the manner provided for by the GovernmentProceedings Act.

Costs.

Cap. 40.

52. The Chief Justice may make rules governing the making of

appeals and providing for the fees to be paid, the scale of costs ofany such appeal, the procedure to be followed therein, and the

manner of notifying the parties thereto; and until such rules aremade, and subject thereto, the provisions of the Civil Procedure Actshall apply as if the matter appealed against were a decree of asubordinate court exercising original jurisdiction.

Rules for appeals to the

Appeals Tribunal.Cap. 21.

PART VII - MISCELLANEOUS53. (1) Any person who -

General penalty.


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(a) contravenes any provision of this Act which is expressly stated

to be an offence but for which no other penalty is prescribed; or(b)fails to comply with any direction given by the Chief Executive

Officer under this Act; commits an offence and shall be liable, onconviction, to a fine not exceeding one hundred thousand shillings,or to imprisonment for a term not exceeding one year, or to both.

(2) A person does not commit an offence under subsection (1), ifhe proves, to the satisfaction of the court, that the act or omissionconstituting the offence was done without his knowledge, consentor connivance and that he attempted to prevent the commission ofthe offence having regard to all the circumstances of the case.

54.(1) When an offence under the provisions of this Act iscommitted by a body corporate, the body corporate and everydirector or officer thereof who had knowledge or should have hadknowledge of the commission of the offence and who did notexercise due diligence to ensure compliance with this Act commitsan offence.(2) Where an offence is committed under this Act by a partnership,every partner or officer of the partnership who had knowledge or

who should have had knowledge of the commission of the offencecommits an offence.

(3) A person shall be personally liable for an offence against thisAct whether committed by him on his own account or as an agentor servant of another person.(4) An employer or principal shall be liable for an offencecommitted by an employee or agent against this Act unless theemployer or principal proves that the offence was committedagainst his express or standing directions.

Offences by corporate

bodies, partnerships,

principals and employees.

55.(1) The Minister may, in consultation with the Authority, make

regulations generally for the better carrying out of the provisions ofthis Act.(2) Without prejudice to the generality of subsection (1),regulations under this section may -(a) prescribe anything required to be prescribed under this Act;(b) subject to this Act, provide for the procedure for registration

and the conditions of registration;(c) provide the eligibility requirements for the membership of

schemes and access to retirement benefits;(d) provide for any matter relating to the nature of benefits under

schemes;(e) prescribe the fees and other charges payable to the Authority;(f) subject to the provision of this Act and of any other written law,make provisions with regard to the winding up of schemes and thetransfer of the assets of the schemes upon such winding up;(g) regulate the transitional period prescribed by section 57.

Regulations.

7 of 1998.

56. The provisions of the State Corporations Act shall not apply tothe Authority.

Exemption from Cap. 446.

57. Any person who, at the commencement of this Act, is a trusteeor manager of a scheme to which this Act applies shall, within sixty

days of the commencement, or within such longer period as theMinister may, in consultation with the Authority prescribe, apply for

Transitional provisions.


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registration under this Act:

Provided that the period prescribed under this section shall notexceed three years.

58. Where there is a conflict between the provisions of this Act and

the provisions of any written law (other than the Constitution) withregard to the powers or functions of the Authority under this Act,the provisions of this Act shall prevail.

Supersession.7 of 1998.

59. The Minister may, by order published in the Kenya Gazette -

(a) exempt any person or class of persons from compliance withany specific provisions of this Act; or

(b) extend the time for compliance by any person or class ofpersons with any specified provisions of this Act; or

Provided that nothing in this section shall apply in respect of any ofthe provisions of Part III of this Act.

SCHEDULE (s.8)PROVISIONS AS TO THE CONDUCT OF BUSINESS AND AFFAIRS OF

THE BOARD.

1.(l) A member of the Board other than an ex officio member shall,subject to the provisions of this Schedule, hold office for a periodnot exceeding four years, on such terms and conditions as may bespecified in the instrument of appointment but shall be eligible forre-appointment for one more term of a period not exceeding fouryears.

(2) The members of the Board shall be appointed at different times

so that the respective expiry dates of the members terms shall fallat different times.

2. A member other than an ex officio member may-

(a) at any time resign from office by notice in writing to theMinister;

(b) be removed from office by the Minister if the member -

(i) has been absent from three consecutive meetings of theBoard without permission from the chairman; or

(ii) is adjudged bankrupt or enters into a composition scheme or

arrangement with his creditors; or

(iii) is convicted of an offence involving dishonesty, fraud or moralturpitude; or

15 of 2003


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(iv) is convicted of a criminal offence and sentenced to

imprisonment for a term exceeding six months or to a fineexceeding ten thousand shillings; or

(v) is incapacitated by prolonged physical or mental illness; or

(vi) is otherwise unable or unfit to discharge his functions.

3.(1) The Board shall meet not less than four times in everyfinancial year and not more than four months shall elapse betweenthe date of one meeting and the date of the next meeting.

(2) Unless three quarters of the total members of the Board

otherwise agree, at least fourteen days' written notice of everymeeting of the Board shall be given to every member of the Board.

(3) The quorum for the conduct of the business of the Board shallhe three members excluding the Chief Executive Officer, of whom

at least one shall be from amongst the members of the Boardappointed under paragraph (f) of section 6.

(4) The chairman shall preside at every meeting of the Board atwhich he is present but in his absence, the members present shall

elect one of their number who shall, with respect to that meetingand the business transacted thereat, have all the powers of the

chairman.

(5) Unless a unanimous decision is reached a decision on anymatter before the Board shall be by a majority of votes of themembers present and in the case of an equality of votes, the

chairman or the person presiding shall have a casting vote.

(6) Subject to paragraph (3), no proceedings of the Board shall

invalid by reason only of a vacancy among the members thereof.

(7) Subject to the provisions of this Schedule, the Board maydetermine its own procedure and the procedure for any committeeof the Board and for the attendance of any other persons at itsmeetings and may make standing orders in respect thereof.

4.(1) If a member is directly or indirectly interested in anycontract, proposed contract or other matter before the Board and is

present at a meeting of the Board at which the contract, proposedcontract or other matter is the subject of consideration, he shall, atthe meeting and a soon as practicable after the commencement

thereof, disclose the fact and shall not take part in theconsideration or discussion of, or vote 01 any questions withrespect to the contract or other matter, or be counted in thequorum of the meeting during consideration of the matter:

Provided that if the majority of the members present are of theopinion that the experience or expertise that member is vital to thedeliberations of the meeting, the Board may permit the member to

participate in the deliberations subject to such restrictions as itmay impose.

(2) A disclosure of interest made under this paragraph shall b


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recorded in the minutes of the meeting at which it is made.

5. The affixing of the common seal of the Authority shall be

authenticated by the signatures of the chairman and the ChiefExecutive Officer and any document required by law to be madeunder seal an all decisions of the Board may be authenticated by

the signatures of the chairman and the Chief Executive Officer:

Provided that the Board shall, in the absence of either the chairmanor the Chief Executive Officer, in any particular matter nominate onmember to authenticate the seal of the Board on behalf of either

the chairman or the Chief Executive Officer.

6. Any contract or instrument which, if entered into or executed bya person not being a body corporate, would not require to be under

seal, may be entered into or executed on behalf of the Authority byany person generally or specially authorised by the Authority forthat purpose.

7. The Board shall cause minutes of all proceedings of meetings ofthe Board to be entered in books kept for that purpose.

LEGAL NOTICE No. 118 of 2000

THE RETIREMENT BENFITS ACT

IN EXERCISE of the powers conferred by section 55 of the

Retirement Benefits Act. the Minister for Finance makes thefollowing Regulations -

THE RETIREMENT BENEFITS (INDIVIDUAL RETIREMEN BENEFITSSCHEMES) REGULATIONS, 2000

PART I - PRELIMINARY

1. These regulations may be cited as The Retirement Benefits(Individual Retirement Benefits Schemes) Regulations 2000

2. These regulations shall apply to individual retirement schemes.

3. In these regulations unless the context otherwise requires:-

" administrator" means the person appointed under a written

instrument by the trustees of a scheme to manage the

administrative affairs of the scheme;


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"approved issuer" means an insurer registered under the Insurance

Act or any other issuer approved in writing under the CapitalMarkets Authority Act or under any other written law:

"custodian" means a custodian registered by the Authority:

"guaranteed fund" means an asset class:-

(a) issued by an approved issuer, whereby the approved issuer,

guarantees the accumulated capital of the scheme fund or pooledfund together with the investment income thereof in accordance

with the terms of the guaranteed fund contract entered intobetween the approved issuer and the scheme or pooled fund;

(b) which is referred to as the Retirement Benefits Fundestablished as a statutory fund within the meaning of theprovisions of the Insurance Act in which the capital of the scheme

fund or pooled fund together with investment income thereof isguaranteed by the approved issuer in accordance with the terms ofthe policy of insurance issued to the scheme or pooled fund by theapproved issuer;

"manager" means a manager registered by the Authority;

"pooled fund" means a fund established by a limited liabilitycompany other than an approved issuer for purposes of poolingscheme funds for collective investment;

"related company" in relation to a company means :-

(a) its holding company or subsidiary;

(b) any person who controls it whether alone or with his associates

or with other associates of the related company;

"scheme" means an individual retirement benefits schemeestablished for the benefit of individual beneficiaries for purposes ofpaying a retirement benefit;

"scheme rules" means the trust deed and rules of the scheme:

"trustees" means a trust corporation;

"trust corporation" means a trust company incorporated under theCompanies Act having a subscribed capita! of not less than ten

million shillings which is for the time being empowered (by orunder any written law. its charter, memorandum or association,deed of settlement or other instrument constituting it or defining itspowers), to undertake trusts but for so long a time only as thatbody corporate shall not, by any prospectus, circular,Advertisement or other documents issued by it or on its behalf,state;or hold out that any liability attaches to the Public Trustee or to the

Consolidated Fund in respect of any act or omission of that bodycorporate when acting as an executor or administrator.


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PART II - REGISTRATION OF A SCHEME

4. Every scheme shall have a registered office within the Republicof Kenya.

5.( 1) An application for registration of an individual RetirementBenefits Scheme shall be in the prescribed form.

(2) The Authority shall within ninety days from the date of receiptof an application for registration submitted under paragraph (1):-

(a) consider the application and notify the applicant in writingwhether the scheme is acceptable for registration and the reasontherefore if it is not acceptable: and

(b) proceed to register the scheme and forward to the applicant acertificate of registration in the prescribed form if the scheme is

acceptable for registration.

6. A sponsor, member, trustee, administrator, manager, custodianor any other interested person may inspect the register maintainedby the Authority of any scheme, manager or custodian and receiveon written application a copy of the register upon payment of theprescribed fee.

PART III - ADMINISTRATION AND BENEFITS

7. Every scheme shall have rules which shall provide for thefollowing :-

(a) the full name of the scheme, including reference to any priorchanges of the name;

(b) the physical address of the registered office of the scheme;

(c) the date of commencement of the scheme;

(d) a list of definitions, in alphabetical order, defining the termswhich are frequently used in the rules and which bear a specialconnotation

(e) requirements for admission to membership into the scheme andthe circumstances under which membership may cease;

(f) requirements under which an employer may remit contributions

on behalf of the members;


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(g) the appointment, term. removal from office, powers and

remuneration of trustees;

(h) powers of in vestment of scheme funds:

(i) mode and method of remitting contributions;

(j) the vesting formula of contributions so long as the vestingperiod does not exceed five years:

(k) conditions under which the member shall become entitled and

the mode of his benefits:

(l) custody of me scheme fund. title deeds and other securitiesbelonging to the scheme:

(m) the appointment of the liquidator in case of a voluntary

dissolution:

(n) the manner in which the scheme shall be dissolved subject tothe provisions of the Act and the regulations made thereunder;

(o) the manner in which contracts and other documents binding the

scheme shall be executed:

(p) the normal retirement age of members;

(pp) the period within which a member who has attained thenormal retirement age, or a member wishing to withdraw his

benefits from the scheme shall be entitled to receive their lumpsumbenefits or withdraw their benefits which period shall not exceed

ninety days from the date of retirement or of giving notice orintention to withdraw such benefits, as the case may be.

(q) the procedure of amending the rules:

(r) the appointment and term of the auditor of the scheme andother persons rendering professional services to the scheme;

(s) the manner in which disputes between the parties of a scheme

shall be solved: and

(t) such other matters as the Authority may approve.

8.(1) A scheme may amend its rules, but no such amendment bevalid:-

(a) if it purports to invalidate or reduce the rights of a member ofthe scheme:

(b) if it purports to effect any right of a creditor of the scheme,other than as a member thereof:

(c) unless it has been approved by the Authority and registered as

specified in paragraph (3).


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(2) Within thirty days from the date of the passing of a resolutionfor the amendment of the scheme rules a copy of such resolution

and amendment shall be transmitted by the trustees to theAuthority for registration.

Provided that if any such amendment affects the financial position

of the scheme, the trustees shall transmit to the Authority acertificate signed by an actuary.

(3) If the Authority finds that any such amendment is consistent

with the Act. and is satisfied that the financial soundness of thescheme will not be affected by the amendment it shall register theamendment and return the copy of the resolution to the trusteeswith the date of registration endorsed thereon, and such

amendment, shall be deemed to take effect as from the datedetermined by the scheme concerned, or if no date has been sodetermined, as from the date of registration.

9. (1) The scheme rules shall make provision for the:-

(a) manner of appointment of trustees and their term of office:

(b) functions, powers and duties of the trustees which shall includethe general supervision and administration of the scheme:

(c} procedure of and grounds for the removal from office oftrustees;

(d) procedure for convening meetings of the scheme.

(2) The duties of the trustees shall include:-

(i) Administering the scheme in accordance with the provisions ofthe Act. these regulations and scheme rules:

(ii) Keeping all proper books and records of account with respect toincome, expenditure, liabilities and assets of the scheme fund;

(iii) Computing and preparing statements of payments of benefits

to members;

(iv) liasing with the Authority, sponsors members, manager,custodian and any other professional engaged by the scheme.

(v) collecting, keeping and updating retirement benefits data ofeach member including maintenance of individual membershiprecords;

(vi) ensuring that the agreed contributions have been remitted to

the custodian as required by the Act, these regulations and thescheme rules:


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(vii) communicating regularly with the members of the scheme

with respect to the affairs of the scheme:

(viii) providing members with annual membership benefitsstatements:

(ix) convening an annual meeting of members to enable them raiseany matters pertaining to their schemes; and

(x) ensuring that documents intended to bind the scheme areprofessionally prepared.

(3) The trustees of a scheme shall be a trust corporation which

shall be appointed under a deed.

10. Where a member of a scheme gives notice to the scheme ofintention to transfer benefits, the scheme shall within sixty days

from the date of the notice transfer to another scheme specified inwriting by such member all benefits of such member:

Provided that a member opting to transfer his benefits, from the

scheme shall not be penalised financially or otherwise by suchscheme.

11. (1) The scheme rules may provide for the appointment,functions, powers, duties, remuneration and removal from office ofan administrator, who may sit in attendance at all meetings of theboard of trustees.

(2) (a) The instrument appointing the administrator shall:-

(i) make provision for the computation of the administrator's fees;

(ii) make provision for the extent of the rights and obligations ofthe administrator to the trustees.

(b) The administrative costs of a scheme debited to the schemefund shall not exceed the budget approved by the trustees for thatpurpose.

(c) The Authority may if it deems appropriate require the scheme

to avail its annual administration budget to the Authority.

(3) Where the administrator is for any reason unable to dischargeany duties imposed upon him by these regulations or the scheme

rules or any other instrument, an acting administrator shall beappointed.

(4) The trustees of the scheme shall notify the Authority of thedetails and qualifications of the person administering the scheme.

12. An agreement between a scheme and the pooled fund, orcustodian, or manager shall not include a clause whose purpose

and intent is to penalise a scheme financially or otherwise wheresuch scheme terminates the agreement.


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13.(1) The scheme rules may provide for the appointment,functions, powers, duties and termination of appointment of a

pooled fund for purposes of investment and custody of the schemefund.

(2) The instrument appointing the pooled fund shall make provisionfor the rights and obligations oftrustees.

(3) A scheme authorized by its scheme rules to appoint a pooled

fund may under a written instrument appoint a pooled fund whoseduties shall include:-

(a) receiving and accounting for the scheme fund in the pooledfund;

(b) keeping or causing to be kept such books, records andstatements as may be necessary to give a complete record of;-

(i) the value of a scheme fund in the pooled fund;

(ii) the investment transactions in respect of the pooled fund

carried out by the custodian as instructed by the manager and shallpermit, subject to notice, the scheme or any dulyauthorized agent to inspect within the premises of the pooled fundsuch books, records and statements at any time during businesshours;

(c) submitting, to the scheme within a period of three months fromthe end of the financial year the audited accounts of the pooled

fund;

(d) notifying the scheme immediately of the particulars of themanager and custodian of the pooled fund as may be sought by the

scheme which particulars shallinclude:-

(i) the full name of the manager and custodian;

(ii) the physical and postal address of the registered office of the

manager and custodian;

(iii) the dates of the first and subsequent financial years of themanager and custodian;

(iv) the contents of an agreement between the pooled fund and themanager and custodian;

and(v) any other particulars the scheme may deem appropriate torequest from the pooled fund.(e) submitting to the scheme at least quarterly from the date of

commencement of the financial year of the scheme:

(i) a valuation of the scheme fund in the pooled fund;


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(ii) a report reviewing the investment activity and performance ofthe investment portfolios comprising the pooled fund since the last

report date and containing the manager's proposals for theinvestment of the pooled fund;

(iii) a record of ail investment transactions of the pooled fundduring the previous period;

(f) issuing proper instructions as provided for in the agreementwith the custodian and manager:

(g) providing to the scheme a copy of the most recent audited

financial statements of the manager and custodian with suchinformation as may be sought by the scheme:

(h) exercising the same standard of care that it exercises over itsown assets in fulfilling any other obligation in the agreement:

Provided that the pooled fund shall exercise the degree of care

expected of a prudent professional in the respective business forhire.

(4) All monetary benefits, commissions or gains arising directly orindirectly out of the pooling of the scheme funds shall be creditedto the pooled fund account.

(5) An agreement between a scheme and a pooled fund shall make

provision for the computation of fees in respect of the poolingservices.

(6) In the event of termination of the agreement referred to in

paragraph (2} hereof, the pooled fund shall within ninety daysfrom the date of termination, hand-over, transfer and deliver to a

manager or another pooled fund appointed in writing by thescheme:-

(a) the funds representing the value of the scheme fund in apooled fund which shall be equal to the market value, at the timeof transfer, of the scheme fund invested in the pool plus a

proportionate share of all accrued investment income,commissions, fees and direct and indirect gains from investing the

pool fund less the proportionate share of all accrued investmentincome, commissions, fees and direct and indirect gains from

investing the pool fund less the proportionate share pre-agreedprofessional fee due to the pooled account.

Provided that, where the liquidation of assets of the pooled fundmay lead to adverse financial loss. the pooled fund and the schememay negotiate an in-specie transfer of assets to the scheme atarms length market values;

(b) the statements pertaining to the entire scheme fund;


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(c) any other information as may be reasonably required by thescheme.

(7) Trustees shall jointly and severally be liable for anyappointment of the pooled fund which does not meet thequalifications and requirements set out for pooled funds in theseRegulations.

14.(1) In determining whether a pooled fund qualifies to beappointed by a scheme for the purpose of investing scheme funds,

a scheme shall consider whether a pooled fund:-

(a) is established by a limited liability company with a minimumpaid up share capital of ten million shillings:

(b) has:

(i) the professional and technical capacity and adequate operationalsystems tomanage a pooled fund: and

(ii) developed a prudent investment policy for the investment of

pooled funds.

(2) A scheme shall not appoint a pooled fund unless such pooledfund consist only of scheme funds maintained separately at alltimes from any other funds under the control of the pooled fund.

(3) A scheme shall ensure that a pooled fund keeps causes to bekept a designated account for the scheme fund of such scheme in

the pooled fund.

15.(1) Every scheme shall maintain or cause to be maintained aquarterly record of contributions in the prescribed form and the

original record shall be submitted to the Authority within ten daysfrom the end of every quarter.

(2) The quarterly record provided for in paragraph (1) may bedelivered to the Authority by electronic mail or facsimile-

(3) Scheme funds including the title deeds, securities and incomethat shall accrue thereof, shall at all times be held and maintained

in custody by a custodian on behalf of the trustees or the pooledfund.

(4) Notwithstanding the provisions of paragraph (3) where schemefunds or pooled funds are invested fully in guaranteed funds, theonly asset of such funds shall be the guaranteed fund contract orthe policy of insurance and such asset shall be held and maintainedin custody by a custodian on behalf of the trustees or the pooledfund.

(5) Contributions payable in respect of a member shall be paid

directly to the custodian on the dates specified in the scheme rules


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and the custodian shall, not later than the first business day

following the day on which the custodian receives thecontributions, deposit the contributions in an account with a bank

duly registered under the Banking Act and such account shall bemaintained by the custodian on behalf of and in the name of thescheme or pooled fund:

Provided that in cases where a scheme, or pooled fund hasinvested its scheme funds fully in guaranteed funds, contributions

may be paid directly to the approved issuer.

16. The scheme rules shall specify the amount of even/ benefitpayable by the scheme and the manner in which such benefit is

calculated.

16A. The scheme rules may provide that where an employer makescontributions thereto on behalf of an employee, such employee

shall become entitled-

(a) upon attaining retirement age; or

(b) upon leaving the service of the employer.

17. Notwithstanding regulation 16A, the Scheme rules may providethat a member be permitted to receive his benefits before attainingretirement age if medical evidence is submitted to the schemeshowing that he is permanently incapacitated and cannot begainfully employed or engaged in any other occupation for which

he is reasonably suited by education, training or experience.

18. The scheme rules shall provide that no benefits or contributionsaccruing or payable thereunder shall be capable of assignment.

19. The scheme rules shall provide that on the death of a memberthe lumpsum benefits payable from the scheme shall be paid to thenominated beneficiary, and if the deceased member had not nameda beneficiary then the trustees shall exercise their discretion in thedistribution of the benefits to the dependants of the deceasedmember:

Provided that the trustees may refuse to pay the nominated

beneficiary and furnish reasons for the refusal which reasons shall

20. Contributions by or on behalf of a member together withinterest and other accrued income thereon shall constitute thescheme fund and it shall vest in a member within such period asshall be specified in the scheme rules so long as the period doesnot exceed five years.

PART IV - FINANCIAL PROVISIONS AND STATEMENTS


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21 (1) Trustees shall keep and maintain such books of accountsand other records as may be necessary for the purpose of

accounting for the assets and liabilities or the scheme.

(2) A scheme shall where applicable cause to be kept such recordswherein an account of every member and individual scheme shallbe maintained and all transactions in respect of each member andindividual scheme shall be duly recorded.

22. (1) Trustees shall within three months from the date of

registration of the scheme appoint an auditor who shall be amember of the institute of Certified Public Accountants of Kenya,

and the appointment shall be notified to the Authority within thirtydays from the date of appointment for approval

(2) Where the Authority refuses to approve the appointment of an

auditor appointed under paragraph (1) or revokes its approval ofan auditor, the auditor shaft vacate office as an auditor of thescheme and the trustees shall appoint another auditor subject toapproval by the Authority.

23. (l) Trustees shall submit audited accounts including the

trustees and investments reports to the Authority together with acertificate signed by the trustees that to the best of theirknowledge and belief the information furnished to the auditor forthe purpose of audit is correct and complete in every respect.

(2) The income and expenditure account and the statement of

assets and liabilities of the scheme shall be prepared in an accrualbasis in the prescribed form and the annual accounts shall be

accompanied by a report signed by the auditor of the fund, andwhere the auditor signs the report with a qualification, the report

shall disclose reasons for such qualification.

(3) Trustees shall within six months from the end of each financialyear:-

(a) conspicuously display in the office of the scheme, a noticenotifying the members that the audited accounts together with thetrustees' and investments reports are available for inspection; and

(b) send to the members a summary of its audited accounts

together with the members' benefit statements.

24. The statement of income and expenditure of the scheme shallbe credited with income receivable, the profits arising from sale ofinvestment and any other receivable income-

25 (1) In this regulation, "net realisable value" means the valuewhich an asset or investment can realise upon disposal at an armslength transaction less expenses payable to effect the disposal.

(2) For the purposes of these Regulations, assets of the scheme

shall be valued at values not exceeding their market or net


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realizable value and in particular-

(a) the value of the land and buildings shall not exceed the value

determined on the basis of a valuation by a registered valuer whois a member of the institute of Surveyors of Kenya once in everythree years or at such shorter intervals as the Authority mayotherwise permit in writing;

(b) where the market value of any security, share, or other

investment is not ascertainable only such value, if, any shall betaken into account as is considered reasonable, having regard to

the financial position of the issuing concern, the dividend paid by itduring the preceding five years and other relevant factors.

26.(1) A scheme which has created and maintained a reserve fund

shall, at least once after every five years from the date ofregistration, be valued by an actuary in the prescribed form andsubmit a copy of the valuation report to the Authority within fivemonths from the end of the financial year:

Provided that a scheme shall not create and maintain a reserve

fund exceeding five per centum of the total value of the schemefund.

(2) Trustees shall prepare certificate in the prescribed form whichshall form part of the actuarial valuation report stating that theyfurnished the actuary with correct and complete information in

every material respect for the purposes of the actuarial valuation.

(3) "Notwithstanding anything contained in paragraph (1), theAuthority may by notice require a scheme to be valued at the cost

of such scheme by an actuary any time in respect of any matterthe Authority may deem appropriate and such valuation shall be in

the prescribed form.

27. Repair and maintenance expenses in respect of investmentsshall be charged to income during the year the expense is incurredand if the repair costs are in the opinion of trustees material, theAuthority may grant approval for it to be amortised over several

financial years but which period shall not exceed three years.

28. The financial statements of a scheme, shall be in the Minimumprescribed form and shall disclose:-

(a) unremitted contributions:

(b) fees and expenses appropriately classified paid directly orindirectly to or, on behalf of the trustees;

(c) returns on investments as per each category ofinvestment;

(d) related party transaction;


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(e) ownership of more than ten per centum equity in any one

company or related companies: and

(f) any other matter as may be prescribed by the Authority.

29. The scheme rules may provide for the protection of the schemefund and assets against any manner of insurable risk and financialloss arising out of any negligence, default or wilful default on thepart of any of its officers, trustees, administrator, manager or

custodian either by way of a guarantee from the sponsor or by wavof insurance of such amount as the trustees may deem adequate.

PART V - INVESTMENT GUIDELINES

30.(1) A scheme and a pooled fund, shall prepare, maintain andafter every three years revise a written statement of the principlesgoverning decisions on investments For the purposes of the

scheme or the pooled fund.

(2) The statement shall cover, among other things:-

(a) the policy of the scheme, or the pooled fund. in compliancewith regulation 3 1:

(b) the policy of The scheme or the pooled fund in the following

matters -

(i) the kinds of investments to be held:

(ii) risk:

(c) the realisation of investments; and.

(d) such other matters as may be prescribed from time to time bythe Authority.

(3) Neither the scheme nor the statement of principles governing,

decisions on investments of the scheme fund or pooled fund, shallimpose-restrictions on any power to make investments by

reference to the consent of the sponsor.

(4) A scheme shall before a statement under this regulation isprepared or revised obtain and consider the written advice of aprofessional investment advisor.

(5) A scheme shall consider the latest actuarial report when

determining the principles governing decisions on investments forthe purposes of the scheme.

(6) Where in the case of a scheme, or a pooled fund:-


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(a) a statement under this section has not been prepared or is notbeing maintained, or

(b) the trustees of a scheme whose funds are not part of a pooledfund or the pooled fund havenot obtained and considered advice from a manager.

the Authority may remove any trustee of such scheme from being

a trustee or disqualify a pooled fund from pooling scheme funds.

(7) The scheme funds shall not be invested in assets that shalldefeat the right of p. member in (he event such member chooses

to transfer his or its benefits respectively to another schemespecified in writing.

31 (1) Notwithstanding the provisions of regulation 30, a scheme,

or pooled fund, shall invest only in an asset class referred to incolumn 1 of form G as prescribed to the extent to which the marketvalue of die investment in the class expressed as a percentage ofthe total assets of the scheme or pooled fund does not exceed the

percentage listed in column 2 of form G as prescribed in respect ofsuch asset:

Provided that:

(a) A scheme, or pooled fund may exceed the maximum indicatedin column 2 in the event of increase in market price of assets,

bonus issues or transfer of investment from one class of assets toanother but any such excess shall not continue for a period of more

than ninety days.

(b) A scheme, or pooled fund, may exceed the maximum indicatedin column 2 in the event of revaluation of real property but any

such excess shall be reported immediately to theAuthority together with an action plan as to how the trusteesintend to return the schemeinto compliance and the Authority shall within thirty days of receiptof the actionplan advise the scheme in writing if the plan is acceptable or

require the scheme to implement the plan subject to suchconditions as the Authority may deem appropriate.

(c) The maximum investment in the quoted equity of any one

company shall be thirty per centum of the aggregate market valueof the total assets of the scheme, or pooled fund.

(d) The maximum investment in the quoted equity, unquotedequity, commercial paper, loan stock and debenture issued by acompany controlled by or a related company of the sponsor shallbe three per centum of the aggregate market value of the totalassets of the scheme.

(e) Investments in the category " any other asset" shall be subject

to the prior written approval of the Authority which shall be given


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or denied by the Authority within thirty days of application by a

scheme.

(2) Any portion of a scheme fund which is not invested through apooled fund or invested in guaranteed funds issued by an approvedissuer for the purposes of this regulation be treated as theaggregate market value of total assets of the scheme and beinvested without regard to the portion of the scheme fund investedthrough a pooled fund or guaranteed fund.

Provided that the prescribed investment guidelines shall not apply

to the approved issuer with regard to the investment of guaranteedfunds

PART VI - LEVY

32.(1) Every scheme shall within four months after the end of itsfinancial year remit a levy to the Authority.

(2) The levy shall be payable in Kenya Shilling denominated

crossed cheque, bankers draft or electronic, money transfer andacknowledged by the issuance of an official receipt of the Authority.

(3) The basis of the annual levy shall be a percentage of the netasset value of the total scheme fund indicated in column 2 of formL as prescribed corresponding to the category in column 1 which

includes the total value of the scheme fund.

Provided that:

(a) the value of the scheme fund to be used in determining thelevy shall be the total fund value indicated in the latest auditedaccounts of the scheme:

(b) notwithstanding anything contained in this regulation, theminimum levy payable to the Authority shall be two thousandshillings per annum.

THE RETIREMENT BENEFITS (OCCUPATIONAL RETIREMENT

BENEFITS SCHEMES) REGULATIONS, 2000

PART I - PRELIMINARY

1. These Regulations may be cited as The Retirement Benefits(Occupational Retirement Benefits Schemes) Regulations, 2000.


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2. These Regulations shall apply to occupational retirement benefits

schemes.

3. In these regulations unless the context otherwise requires: -

"administrator" means the person appointed under an instrumentby trustees to manage the administrative affairs of the scheme;

"approved issuer" means an insurer registered under the provisionsof the Insurance Act or any other issuer approved in writing under

the provisions of the Capital Markets Authority Act or under anyother written law;

"contribution holiday" means a period when an employer is notrequired to make contributions into a scheme fund;

"custodian" means a custodian registered by the Authority;

"defined benefit scheme" means a scheme other than a definedcontribution scheme;

"defined contri

Cap 3 of 1997 The Retirement Benefits Act.doc

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